Which of the Following Statements Are Correct Concerning the Present

question 92

Multiple Choice

Which of the following statements are correct concerning the present value of $1.00 five years from today discounted at 5%?
I.The present value is equal to $1.00 divided by 1.05 to the 5th power.
II.If the discount rate were less than 5%, the present value would be smaller.
III.If the discount rate were more than 5%, the present value would be smaller.
IV.If the $1.00 were to be received 6 years from today, the present value would be larger.

• A)I and II only
• B)I and III only
• C)II and III only
• D)I, III and IV only

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Definitions:

Psia

Pounds per square inch absolute. Measure of pressure values used in North America that factors in atmospheric pressure of 14.7 psi.

Atmospheric Pressure

The pressure exerted by the weight of the atmosphere, crucial for weather patterns and breathing.

Sea Level

The average level of the surface of the ocean at any given place, used as a standard in calculating land elevation and water depth.

Hydraulic Pressure

The pressure exerted by a fluid in a hydraulic system, used to generate force and motion in hydraulic machinery and tools.